Sustainability

Social Responsibilities

Nurturing Talent and Contributing to Society

Empowering and investing in our employees has always been the core of our culture and values. We recognise that they are the driving force behind our ongoing innovation and success. At Xtep, we highly value our employees and strive to create a diverse and inclusive workplace where our talents can thrive.

The Group demonstrates our unwavering commitment to the communities where we operate by actively supporting charitable initiatives through in-kind, monetary donations and encouraging employee volunteering. By actively engaging in these endeavours, we aim to make a meaningful and lasting impact on the community we serve.

Supporting the Growth and Well-Being of Our People

We recognise the essential contribution of our employees to the Group’s continuous and sustainable growth. The Group’s staff management practices focused on attracting and retaining talents by offering competitive compensation and extensive training opportunities and fostering a caring and supportive culture. Our commitment is to create a safe, positive, and talent-nurturing work environment where our employees are empowered to leverage their strengths and pursue their potential with equal opportunities.

Staff portfolio

Our group’s development relies on skilled and capable employees. As of 2024, we had approximately 8,900 employees and the breakdown is as follows.

Talent retention

The Group strictly adheres to the Labor Law of the People’s Republic of China and the Labor Contract Law of the People’s Republic of China, ensuring fairness and consistency in recruitment and employment practices. Our Staff Handbook covers key issues such as remuneration and termination, recruitment and promotion, working hours, and leave, to promote equal opportunities within the workplace. This year, our employee turnover rate was 19.2%, below the target rate of 30%, demonstrated our efforts of retaining talents.

In terms of compensation and benefits, we have implemented fair and competitive systems to ensure that salary levels exceed the local minimum wage standards. Salary determination is based on factors such as tenure, experience, scope of work, performance, and market conditions, with regular reviews of market salary data and annual salary adjustments to maintain the reasonableness of our compensation packages. We have introduced equity incentive plans, with incentive policies covering all general employees, aiming to motivate and reward staff career development within the company. Additionally, we offer salary adjustments for high-performing employees to recognize their exceptional contributions.

We have established a mature performance management system to evaluate employee performance, which serves as the basis for promotions and salary adjustments. As part of the performance system, regular discussions between employees and supervisors are conducted to gather feedback, which is crucial for enhancing employees’ performance and aligning individual goals with organizational objectives. This year, 35 meetings were held to promote internal communication and foster collaboration, resulting in improved employee engagement and stronger teamwork. We introduced an online platform named “X-TALK” to provide a channel for frontline employees to share their perspectives, enabling us to gain deeper insights into their experiences. Additionally, we enhanced our performance-based incentive structure by revising the bonus calculation methodology, allowing high-performing employees who exceed their targets to receive increased rewards.

Child and forced labor

The Group is committed to creating a supportive and respectful working environment that enables all employees to perform at their best while strictly adhering to relevant laws and regulations to safeguard employees’ fundamental rights. We firmly oppose child labor and forced labor, with specific provisions outlined in the Staff Handbook. During recruitment and onboarding processes, stringent checks and control procedures are implemented to prevent the employment of minors. Regular reviews of employment practices are conducted to ensure fairness and legality. No material violations of labor standards or related laws and regulations were identified during the reporting period.

Furthermore, our commitment to ethical labor practices extends beyond our own operations to encompass supply chain management. In 2024, we revised the Supplier Corporate Social Responsibility Manual, focusing on assessing potential and existing suppliers based on their compliance with fundamental labor rights and the standards of accommodation and catering services provided to employees. No instances of child labor or forced labor were identified in supply chain assessments during the reporting period. Further details regarding supplier management can be found in the section — Supplier Assessment and Management of this Report.

Labour health and safety

In 2024, the Company continued to prioritize the protection of employees’ health and safety by implementing a robust Occupational Health and Safety Management System (“OHSMS”) and strict management measures to effectively mitigate occupational health and safety risks. During the reporting period, the Company successfully renewed its ISO 45001:2018 certification for the OHSMS and strictly adhered to relevant laws and regulations. Standardized operating procedures and work guidelines were established to provide clear guidance for employees. The Company also set targets, standardized procedures, and emergency response plans for identified risks to promptly eliminate potential safety hazards.

In terms of occupational health and safety management, the Company adopted a range of proactive measures. In May 2024, the annual occupational disease status monitoring was completed, and in April 2023, a triennial occupational disease status assessment was conducted. The Company identified safety risks across different environments, machinery, and equipment, and implemented a dual prevention mechanism that focuses on risk grading management and control of safety risks. The results of the occupational disease and safety risk identification for the year met relevant requirements, and no significant safety risks were identified through the Likelihood Exposure Consequence method. Additionally, the Company organized a comprehensive health examination for all employees in May 2024 to identify potential health issues proactively.

To improve the working environment, the Company replaced the activated carbon in the production exhaust system in November 2024, newly installed four automated laser cutting machines, and renovated the factory restrooms to reduce safety hazards associated with manual operations. These efforts aimed to provide employees with a safer and more comfortable working environment. During the reporting period, the Company achieved a general hazard rectification rate of 99%, a major hazard rectification rate of 100%, and fewer than three instances of “three-violation” (Violation of command, illegal operation, and violation of labor) per year, with a 100% rectification rate. Employees in key positions achieved 100% compliance with personal protective equipment usage, safety training notification rates for relevant parties, and integrity rates of equipment. The working and living conditions of employees met national industrial hygiene standards, and the Company conducted at least three emergency response drills throughout the year.

The Company places great emphasis on daily safety management, with professional health and safety officers conducting on-site inspections during each work shift to ensure employees strictly follow safety protocols during production. Additionally, the Company uses notice boards and LED screens to educate employees on the latest laws and regulations related to fire safety, food safety, and workplace safety, reinforcing safety awareness. During the reporting period, no incidents occurred that violated laws and regulations and had a significant impact on the Group.

In terms of equipment management, the Company regularly maintains and upgrades special equipment, fire safety equipment, surveillance systems, and machinery to provide employees with necessary protective gear. The Company also established a Safety Production Committee, which convened four major safety-themed meetings in 2024, including quarterly Major Hidden Danger Investigation and Rectification Meetings and an annual Safety Production Meeting. Furthermore, the Company conducts a comprehensive assessment of occupational hazards in facilities and operations every three years and performs annual inspections to identify occupational risks.

In 2024, the Company reported 39 workplace-related accidents, the majority of which occurred during commuting rather than within the workplace itself. All incidents were promptly reported to the relevant authorities for occupational injury assessment and proper follow-up. The Company deeply regrets the unfortunate incidents that occurred during the reporting period. We have offered our condolences and support to the families and employees affected instantly. To learn from these incidents and drive continuous improvement, the Company has taken the following proactive measures:

• Enhanced safety training: Comprehensive safety awareness training has been conducted for all employees, particularly focusing on commuting safety and workplace operating procedures.
• Improved working environment: A thorough inspection of the workplace and equipment has been carried out, and safety facilities have been upgraded to minimize potential risks.
• Refined emergency response mechanisms: More efficient emergency response plans have been established to ensure swift actions and support during emergencies.
• Risk assessment: A risk identification process has been implemented for similar production equipments, with a detailed checklist produced for continuous risk management.

Employee’s health and well-being training

To maintain a high level of health and safety awareness, we undertake regular emergency drills to ensure our staff are equipped with abilities to respond appropriately to incidents, thereby strengthening their preparedness and identifying potential gaps in our emergency plans. Additionally, we reinforce safety consciousness and knowledge through a range of training initiatives, including induction safety education for new joiners, annual safety refresher training for all employees, and specialized training for those working with hazardous materials.

During the reporting period, we strictly implemented our safety management systems, achieving 100% coverage for specialized training and health screenings for specific workers, and safety education for new hires. Furthermore, we ensured 100% compliance with certification requirements for special operations workers and 100% inspection rates for special equipment.

Our management team conducts regular reviews of incident cases to identify root causes and implement preventive measures, driving continuous improvement in safety management. Additionally, we provide supplementary occupational health assessments for employees working in high-risk positions to monitor their health status.

Beyond occupational health and safety, we are committed to supporting the overall health and well-being of our employees. This includes providing annual free health examinations to help identify potential health issues. We also offer necessary psychological support services to assist employees in maintaining good mental health. To further enhance employees’ overall wellness, we have introduced health awareness training programs, covering topics such as cold prevention and emotional management, to promote a culture of health and well-being within the organization.

Training and development

To foster a skilled, capable, and culturally aligned workforce that supports the Company’s sustainable growth, the Group has invested in extensive training and upskilling opportunities for our employees. Our approach focuses on enhancing employees’ professional expertise, leadership capabilities, and cultural alignment, ensuring that individual growth aligns with our long-term objectives. During the reporting year, 100% of our employees have undergone training sessions.

Xtep’s talent development framework is centered around three core pillars: leadership, professional expertise, and cultural alignment, offering employees diverse and customized learning pathways. This year, we achieved a total training duration of 711,240 hours.

• Professional Expertise Development: Xtep leverages capability models and tiered design to accurately identify employees’ skill enhancement needs. Through innovative training methods such as online learning platforms and “learning by doing” initiatives, such as Artificial Intelligence (“AI”) design competitions and footwear development contests, aiming to equip our employees with practical skills that drive business innovation and efficiency.
• Leadership Development: For management staff, Xtep utilized Individual Development Plans to create tailored growth strategies. Programs such as “Navigator”, “Pacesetter” and “Career Accelerator” are designed to enhance leadership capabilities at different career stages, ensuring managers are equipped to meet evolving challenges.
• Cultural Alignment: To strengthen employees’ understanding and commitment to Xtep’s core values, we implement innovative initiatives and cultural heritage activities. For example, the “Alignment Program for Shared Core Values” was designed to unify employees around shared values and goals.

To ensure effective learning, Xtep continuously improves its online platform, offering various resources and targeted programs. In 2024, the platform has recorded over 3,386 active learners. Additionally, our ongoing collaborations with Beijing Institute of Fashion Technology and Fuzhou University continued to nurture talents within the footwear and apparel industry. We will continue to actively engage with educational institutions to identify and attract promising candidates with technical skills and potential. Our goal is to increase the proportion of first successors to key positions to over 80%.

Employee’s engagement, leisure and welfare

We are committed to fostering a comprehensive support system for our employees, aiming to enhance their overall well-being. In addition to improving existing benefits such as statutory insurance, paid leave, and regular health examinations, we have expanded our welfare programs to include medical subsidies, catering to the diverse needs of our workforce. Furthermore, we have established an Employee Mutual Fund to provide timely financial support to employees facing unforeseen difficulties, helping them navigate challenging circumstances with greater ease.

In our workplace, we have introduced dedicated facilities such as lactation rooms for working mothers, fitness centers, and an employee care studio, all aimed at promoting physical and mental health. To accommodate varying work-life needs, we have implemented flexible working arrangements, enabling employees to work remotely or work from home when necessary, thereby better balancing their professional and personal responsibilities. Additionally, we have extended family visitation leave for out-of-town employees, further supporting their work-life harmony.

To enrich employees’ daily experiences, we provide access to a well-stocked canteen offering nutritious and appealing meals, as well as fully equipped dormitories.

Xtep Sunshine Children’s Home
At Xtep, we extend our care to employees’ families. Beyond assisting with children’s education, we opened the Xtep Sunshine Children’s Home last August, featuring learning areas, play zones, a piano room, and rest spaces. This multifunctional facility offers after-school care, academic support, recreational activities, and interest development for over 100 pre-school-aged children of our employees, creating a nurturing environment for their growth and well-being.

Employee Health and Wellness
To support employees in maintaining a healthy work-life balance, we offer free access to our fitness center from 5:30 PM to 8:00 PM on workdays. Recognizing the importance of physical health for both individual development and alignment with our company’s athletic culture, we encourage regular exercise. Additionally, our employee care studio provides scientifically-based psychological support and counseling services, offering employees a platform to address personal challenges and maintain emotional well-being.

Cultivating a Supportive Corporate Culture
We strive to build a culture of inclusivity and belonging through various initiatives. Our “Sunshine sharing” sessions provide a platform for employees to exchange inspiring stories, celebrate achievements, and strengthen team cohesion. We also promote active lifestyles through running clubs and other interest groups, enriching employees’ leisure time. Thoughtful gestures, such as birthday gifts, further demonstrate our commitment to employee well-being. Moreover, we celebrate key dates such as International Women’s Day, Mother’s Day, and Father’s Day with special events, reinforcing our values of family, gratitude, and inclusion. These efforts reflect our dedication to creating a workplace where employees feel valued, supported, and motivated.

Diversity, equity and inclusion

Our Group places great emphasis on fostering a culture of DEI, which is realized through systematic policies and practices. We have clearly outlined relevant policies in our Staff Handbook and implemented a range of DEI measures to ensure equal employment opportunities for all employees. Additionally, we are committed to increasing the representation of women in leadership roles. In 2024, we officially introduced the Group-wide Female Employees Protection System, which safeguards the legitimate rights and interests of female employees across multiple dimensions, including employment, health care, workplace environment, and prevention of sexual harassment. This initiative aims to promote gender equality and create a respectful, equitable, and caring work environment.

Employee’s feedback is a cornerstone in shaping a diverse and inclusive workplace. We conduct two satisfaction surveys annually to gather insights on HR and administrative functions. Furthermore, we uphold employees’ legal rights to collective bargaining and freedom of association. Currently, over 4,600 employees in Xiamen and Quanzhou have joined the Company’s union. To ensure fairness and transparency, we have established multi-tiered management teams to facilitate effective communication and coordination between different levels of the organization. Additionally, we have formed a dedicated review panel, comprising HR representatives, complaint supervisors, and representatives from relevant departments, to conduct impartial and comprehensive assessments of employee grievances. This mechanism is designed to protect the rights of all employees and foster a fair, inclusive, and respectful work environment.

Contributing a Positive Impact to Our Society

We fully understand that sustainable development is driven by fulfilling social responsibility. Therefore, our Group has consistently been dedicated to implementing initiatives that promote sustainable growth and meet societal needs, bringing positive impacts to the communities where we operate. Looking ahead, we will continue to leverage our corporate strengths to actively participate in charitable activities.

Promoting sports and active lifestyles

Xtep is committed to enhancing social well-being and making strategic investments in the communities we serve. We invigorate communities and promote healthy lifestyles through initiatives such as sponsoring marathon events, which encourage residents to adopt an active lifestyle through recreational running.

Xtep Running Club
The Xtep Running Club serves as a professional one-stop destination for runners, integrating events, social interactions, equipment, and services. It is dedicated to delivering tailored and considerate support to runners nationwide. As of 31 December 2024, there were 72 Xtep Running Clubs across Mainland China, creating value for over 2.2 million Xtep Runners Club members. Our club aims to integrate running into everyday life, offering expert services to enhance and enrich the running experience.

Xtep Kids
As a professional brand that focuses on children’s sports apparel, Xtep pays close attention to the healthy growth of children. We organize family sports events, sponsor family running activities, and advocate for the importance of children’s physical development. Scientific and professional sports equipment is essential for children’s physical development, and Xtep Kids collaborates with Tsinghua University to host forums focused on the healthy growth for Chinese children, aiming to advance research related to children’s growth. Additionally, we emphasize nurturing children’s interest in sports by donating to the construction of street dance studios, supporting street dance education programs, and sponsoring charity events showcasing street dance achievements.

Merrell and Saucony
As professional sports brands, Merrell and Saucony actively organize and sponsor various outdoor activities to promote sports culture and seek collaborations to enhance their brand influence. In 2024, Merrell sponsored the Xiamen Tong’an Ultra Trail Race, Shenzhen 100 Ultra Trail Race, and Guangzhou 100 Ultra Trail Race, while also collaborating with local clubs to host numerous urban outdoor events, including city road races, urban treks, and trail running. These initiatives encourage urban residents to embrace nature through healthy and active running events.

In addition, Xtep Group has sponsored the “2024 Wuhan Open Tennis Tournament”, marking Xtep’s first step into the tennis sector and elevating its diversification strategy to new milestone. During the WTA 1000 Wuhan Open, as an official sponsor, Xtep provided professional equipment support to event staff and hosted multiple activities to showcase its brand influence. Xtep has also officially signed on as a global partner for The World Games 2025 to be held in Chengdu, following its collaboration with Chengdu during the 2021 FISU World University Games. By continuously innovating and strategically positioning itself, Xtep aims to inspire more Chinese people to embrace a healthy and active lifestyle, aligning with its goal of dedicating 1% of its net income annually to support sports development in China.

Running event sponsorship
At Xtep, we deeply understand the transformative power of sport in uniting communities and improving individual well-being. Sponsoring large-scale running events such as marathons lies at the heart of our mission to promote health and create a vibrant society.

Through these events, we demonstrate Xtep’s ESG values, such as supporting rural revitalization and empowering women through sport. For example, our national “Harmonious and Beautiful Rural Run for Health” events support the development of rural areas in China, while our sponsorship of the women’s half-marathon race promotes gender equality in sports. In 2024, we optimized our resources to sponsor renowned marathons and running events throughout China, endorsing a total of 44 events.

Donations and Charity Events

At Xtep, we are dedicated to responsible operations and giving back to the communities where we operate. The Group fosters a culture of civic engagement and actively invests in impactful community initiatives through partnerships with local charitable organizations and employee volunteer programs. During 2024, Xtep donated sportswear and financial contributions exceeding RMB58 million. Following our commitment to the China Next Generation Education Foundation in 2023, this year marks the first year of our donation pledge, with continued efforts to benefit more Chinese youth.

³ The reported turnover rates exclude the factory piecework employees.
⁴ Work-related injuries reported refer to cases reported to the local Human Resources and Social Security Bureau for an occupational injury assessment. The lost day figure reported is the aggregate of the work-related injury leave periods indicated by the assessments.
⁵ Including employees, contractors and employees who left the Group during the reporting period.